Tax Reform Likely to Impact Charitable Giving

December 21, 2017

Under the newly passed tax reform bill, charitable giving will likely be affected. As with any economic change, you may be looking at your finances and wondering how you will be impacted. With this new legislation, the tax benefits of your 2018 charitable giving may be affected, particularly if you currently itemize.

The Tax Cuts and Jobs Act provides for several new lower tax rates, nearly doubles the standard deduction, and eliminates personal exemptions and almost all itemized deductions. Although the legislation maintains the current-law income tax charitable deduction, it will significantly reduce the number of taxpayers who itemize and effectively eliminate the income tax charitable deduction for a vast majority of Americans.

If you plan to itemize for 2017, you may wish to consider making a gift this calendar year to realize the full tax benefit. In addition, it may make sense for you to accelerate some charitable contributions planned for 2018 into 2017 to get a larger income tax charitable deduction this year.

It’s Not Too Late

To make sure you see a tax break for this year (when you itemize deductions on your income tax returns), you must make your gift before Dec. 31. Here are a few important things to keep in mind:

1. Talk With Your Tax Advisor
We recommend you consult your tax or financial advisor to determine if increasing your charitable giving in 2017 will be beneficial for your situation.

2. Charitable Giving Funds
Establishing a charitable giving fund at the Community Foundation allows you to make a contribution of assets now and remain actively involved in suggesting uses for your giving in the future. Opening a fund allows you to receive an immediate tax deduction for your gift, as well as time to make grant recommendations in the future. This allows time for you and your family to learn about and consider charitable organizations you wish to support. Grant awards are issued to charities in the name of the fund.

If you already have a fund at the Community Foundation, now is the time to consider a year-end contribution to receive maximum tax benefits. Don't forget, appreciated stock is a great option and gifts may be eligible for the Endow Iowa Tax Credit.

3. Contact Our Charitable Giving Team
We stand ready to serve as a resource and partner for your charitable giving. Reach our team of experts at (515) 883-2626.